IBP, inc. AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                   (In thousands, except share and per share data)

                                                    December 26,  December 27,
                                                        1998          1997
                                                    ------------  ------------
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                          $   27,254    $   69,022
  Marketable securities                                   1,400         3,120   
  Accounts receivable, less allowance for          
    doubtful accounts of $12,111 and $10,063            599,999       564,125
  Inventories (Note B)                                  405,418       389,753
  Deferred income tax benefits (Note E)                  51,761        48,602
  Prepaid expenses                                       10,983         9,305
                                                      ---------     ---------
    TOTAL CURRENT ASSETS                              1,096,815     1,083,927
                                                      ---------     ---------
PROPERTY, PLANT AND EQUIPMENT, at cost:
  Land and land improvements                            106,492       108,055
  Buildings and stockyards                              544,711       501,166
  Equipment                                           1,096,571     1,053,983
                                                      ---------     ---------
                                                      1,747,774     1,663,204
  Accumulated depreciation and amortization            (843,937)     (774,694)
                                                      ---------     --------- 
                                                        903,837       888,510
  Construction in progress                              168,256       128,572
                                                      ---------     --------- 
                                                      1,072,093     1,017,082
OTHER ASSETS:                                         ---------     ---------
  Goodwill, net of accumulated amortization
    of $158,808 and $137,996                            724,089       671,557
  Other                                                 115,099        66,375
                                                      ---------     --------- 
                                                        839,188       737,932
                                                      ---------     ---------
                                                     $3,008,096    $2,838,941
                                                      =========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued expenses (Note D)     $  565,517    $  569,641
  Notes payable to banks (Note C)                       140,967       192,010
  Federal and state income taxes                        152,122       106,375
  Deferred income taxes (Note E)                          1,818         4,266
  Other                                                   5,388         4,526
                                                      -----------   ---------
    TOTAL CURRENT LIABILITIES                           865,812       876,818
LONG-TERM OBLIGATIONS (Notes C and F)                   575,522       568,281
DEFERRED CREDITS AND OTHER LIABILITIES:
  Deferred income taxes (Note E)                         17,037        15,446
  Other                                                 148,811       141,327
                                                      ---------     ---------
                                                        165,848       156,773
                                                      ---------     ---------
COMMITMENTS AND CONTINGENCIES (Notes N and O)
STOCKHOLDERS' EQUITY (Note G): 
  Preferred stock, 25,000,000 shares
    authorized; none issued
  Common stock, $.05 par value per share;
    authorized 200,000,000 shares;
    issued 95,000,000 shares                              4,750         4,750
  Additional paid-in capital                            405,278       406,952
  Retained earnings                                   1,067,725       886,964
  Accumulated other comprehensive income                (16,456)       (6,114)
  Treasury stock, at cost, 2,686,188
    and 2,414,349 shares                                (60,383)      (55,483)
                                                      ---------     ---------
    TOTAL STOCKHOLDERS' EQUITY                        1,400,914     1,237,069
                                                      ---------     ---------
                                                     $3,008,096    $2,838,941
                                                      =========     ========= 
See notes to consolidated financial statements.




                              IBP, inc. AND SUBSIDIARIES  
                          	CONSOLIDATED STATEMENTS OF EARNINGS
                         (In thousands, except per share data)


                                                 52 Weeks Ended
                                  -------------------------------------------
                                  December 26,    December 27,   December 28,
                                      1998            1997           1996
                                  ------------    ------------   ------------ 


 Net sales (Note A)               $12,848,635     $13,258,784    $12,538,753
 Cost of products sold             12,186,427      12,815,892     12,095,171
                                   ----------      ----------     ----------
 Gross profit                         662,208         442,892        443,582

 Selling, general and
     administrative expense           288,473         216,176        120,674
                                   ----------      ----------     ----------
 Earnings from operations             373,735         226,716        322,908

 Interest:
   Incurred                           (55,653)        (50,001)       (19,536)
   Capitalized                          7,976           6,933          6,813
   Income                               4,464           5,066          9,350
                                   ----------      ----------     ----------  
                                      (43,213)        (38,002)        (3,373)
                                   ----------      ----------     ----------
 Earnings before income taxes 
   and extraordinary item             330,522         188,714        319,535

 Income taxes (Note E)                125,700          71,700        120,800
                                   ----------      ----------     ---------- 
 Earnings before extraordinary
   item                               204,822         117,014        198,735

 Extraordinary loss on early
   extinguishment of debt,
   less applicable taxes
   (Note F)                           (14,815)           -              -
                                   ----------      ----------     ----------
                                      
 Net earnings                     $   190,007     $   117,014    $   198,735
                                   ==========      ==========     ==========


 Earnings per share (Note K):
   Earnings before extraordinary
     item                               $2.21           $1.26          $2.10
   Extraordinary item                    (.16)            -              -
                                         ----            ----           ----
   Net earnings                         $2.05           $1.26          $2.10
                                         ====            ====           ====
 
 Earnings per share - assuming dilution:
   Earnings before extraordinary 
     item                               $2.19           $1.25          $2.07
   Extraordinary item                    (.16)            -              -
                                         ----            ----           ----
   Net earnings                         $2.03           $1.25          $2.07
                                         ====            ====           ====

 See notes to consolidated financial statements. 






<TABLE>
                                        IBP,inc. AND SUBSIDIARIES        
                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                         AND COMPREHENSIVE INCOME
                                   (in thousands, except per share data)

                                                                               Accumulated  
                                                        Additional               Other     
                                              Common     Paid-in    Retained  Comprehensive  Treasury
                                    Total      Stock     Capital    Earnings     Income       Stock
                                 ----------   ------   ----------  ---------  -------------  --------
                                                                                                               
<S>                              <C>           <C>      <C>        <C>          <C>          <C> 
                                                                                                              
Balances, December 30, 1995      $1,022,939    $4,750   $432,726   $ 589,936    $    116     $(4,589)      
Comprehensive income:             ---------                                                                        
 Net earnings                       198,735                          198,735                              
 Other comprehensive income:                                                                                
    Foreign currency                                                                                       
      translation adjustments          (148)                                        (148)                 
                                  ---------
Comprehensive income                198,587                                                                
                                  ---------
Dividends declared on common                                                                               
 stock, $.10 per share               (9,472)                         (9,472)                             
Treasury shares purchased           (15,405)                                                 (15,405)      
Treasury share delivered under                                                                             
   employee stock plans               7,006              (5,270)                              12,276      
                                  ---------     -----   -------     -------       ------      ------                      
Balances, December 28, 1996       1,203,655     4,750   427,456     779,199          (32)     (7,718)     
                                  ---------
Comprehensive income:                                                                                      
 Net earnings                       117,014                         117,014                              
 Other comprehensive income:                                                                               
    Foreign currency                                                                                       
      translation adjustments        (6,082)                                      (6,082)                 
                                  --------- 
Comprehensive income                110,932                                                                
                                  ---------
Dividends declared on common                                                                               
 stock, $.10 per share               (9,249)                         (9,249)                             
Treasury shares purchased           (73,915)                                                 (73,915)     
Treasury share delivered under                                                                            
   employee stock plans               5,646             (20,504)                              26,150      
                                  ---------     -----   -------     -------       -----      -------    
Balances, December 27, 1997       1,237,069     4,750   406,952     886,964      (6,114)     (55,483)     
                                  ---------                                                                                         
Comprehensive income:                                                                      
 Net earnings                       190,007                         190,007                                                         
 Other comprehensive income:                                                                                
    Foreign currency                                                                                        
      translation adjustments       (10,342)                                    (10,342)                 
                                  --------- 
Comprehensive income                179,665                                                                 
                                  ---------
Dividends declared on common                                                                                
 stock, $.10 per share               (9,246)                         (9,246)                             
Treasury shares purchased           (12,370)                                                 (12,370)     
Treasury share delivered under                                                                              
   employee stock plans               5,796              (1,674)                               7,470     
                                  ---------     -----   -------    ---------   --------      -------          
Balances, December 26, 1998      $1,400,914    $4,750  $405,278   $1,067,725  $ (16,456)    $(60,383)     
                                  =========     =====   =======    =========   ========      =======


See notes to consolidated financial statements.



                                IBP, inc. AND SUBSIDIARIES 
                          CONSOLIDATED STATEMENTS OF CASH FLOWS  
                                     (In thousands)
                                                        52 Weeks Ended
                                             --------------------------------   
                                             Dec. 26,    Dec. 27,   Dec. 28, 
                                                1998        1997      1996
                                             --------    --------   --------- 
                                                       Inflows (outflows)
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings                                $190,007   $ 117,014   $ 198,735
                                              -------    --------    --------   
 Adjustments to reconcile net earnings       
  to cash flows from operations:
   Depreciation and amortization              100,821      92,292      73,910
   Amortization of intangible asts             25,405      17,638       8,780
   Deferred income tax (benefit)rovision       (5,300)      1,175       7,500
   Extraordinary loss on
    extinguishment of debt                     14,815        -           -   
   Working capital changes, net of
      effects of acquisitions:        
    Accounts payable and accrued 
     liabilities                               71,936     (21,901)    (57,976)
    Accounts receivable                       (32,070)    (16,069)     28,950
    Inventories                               (13,773)    (11,761)      3,912
   Other adjustments, net                       8,989       9,529       4,167
                                              -------    --------    --------
                                              170,823      70,903      69,243
Net cash flows provided by    
operating activities                          360,830     187,917     267,978
                                              -------     -------    -------- 

CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from disposals of marketable
  securities                                  257,721     403,723     922,051
 Purchases of marketable securities          (250,954)   (237,243) (1,043,180)
 Capital expenditures                        (245,692)   (133,925)   (170,664)
 Investment in life insurance contracts       (38,000)     (4,000)       -
 Payments for stock of new subsidiaries,
  net of cash acquired                           -       (324,891)       -    
 Other investing activities, net               (2,051)      9,855       1,944
                                              -------     -------    -------- 
Net cash flows used in investing 
  activities                                 (278,976)   (286,481)   (289,849)
                                              -------     --------   -------- 
                                                     
CASH FLOWS FROM FINANCING ACTIVITIES:
 Principal payments on long-term 
  obligations                                (114,371)   (212,054)       (615)
 Proceeds from issuance of long-term debt      49,773     132,187     197,878
 Net change in checks in process of 
  clearance                                   (29,464)     (7,715)     22,520
 Premiums paid on early retirement of debt    (20,636)       -           -
 Increase (decrease) in short-term debt        11,000     238,500    (200,000)
 Dividends paid                                (9,252)     (9,300)     (9,473)
 Purchases of treasury stock                  (12,370)    (73,915)     (3,129)
 Other financing activities, net                3,246       6,465      (7,497)
                                              -------     -------     ------- 
 Net cash flows (used in) provided by 
   financing activities                      (122,074)     74,168        (316)
                                              -------     -------     -------
Effect of exchange rate on cash and
   cash equivalents                            (1,548)       (746)         74
                                              -------     -------      ------
Net change in cash and cash equivalents       (41,768)    (25,142)    (22,113)
Cash and cash equivalents at beginning 
  of year                                      69,022      94,164     116,277
                                              -------     -------    --------
Cash and cash equivalents at end of year     $ 27,254    $ 69,022   $  94,164   
                                              =======     ========   ========
See notes to consolidated financial statements.


   

                      IBP, inc. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          FISCAL YEARS ENDED DECEMBER 26, 1998, DECEMBER 27, 1997
                           AND DECEMBER 28, 1996

      (Columnar amounts in thousands, except per share amounts)

A.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
	
  	PRINCIPLES OF CONSOLIDATION - All subsidiaries are wholly-owned and 
are consolidated in the accompanying financial statements.  All material 
intercompany balances, transactions and profits have been eliminated.

  	MANAGEMENT'S USE OF ESTIMATES - The preparation of financial 
statements in conformity with generally accepted accounting principles 
requires management to make estimates and assumptions that affect the 
reported amounts of assets and liabilities and disclosure of contingent 
assets and liabilities at the dates of the financial statements and the 
reported amounts of revenues and expenses during the reporting periods.  
Actual results could differ from those estimates.

  	FISCAL YEAR - IBP's fiscal year ends on the last Saturday of the 
calendar year.  Fiscal years 1998, 1997 and 1996 all consisted of 52 
weeks.

  	EXPORT SALES - In 1998, 1997 and 1996, net export sales, principally 
to customers in Asia and also to destinations in the Americas and Europe, 
amounted to $1.6 billion, $1.7 billion and $1.7 billion, respectively.

  	STATEMENT OF CASH FLOWS - For purposes of the statement of cash 
flows, management considers all highly liquid debt instruments purchased 
with original maturities of three months or less to be cash equivalents.  
Such investments are carried at cost, which approximates fair value.  

  	DERIVATIVE INSTRUMENTS - To manage interest rate and currency 
exposures, the company uses interest rate swaps and currency forward 
contracts. IBP specifically designates interest rate swaps as hedges of 
debt instruments and recognizes interest differentials as adjustments to 
interest expense in the period they occur.  Gains and losses related to 
foreign currency hedges of firmly committed transactions are deferred and 
are recognized in income when the hedged transaction occurs.

  	To manage its commodity exposures, the company uses commodity 
futures, options and forward contracts.  These instruments are used 
primarily in forward purchases of livestock and, to a lesser extent, 
forward sales of products.  The company accounts for these instruments as 
hedges of specific lots of livestock or sales and any gain or loss is not 
recognized until the hedged transaction occurs.    

  		Livestock hedging gains or losses are included in cost of 
products sold while forward sales hedging transactions are recorded in 
net sales.  Cash flows related to derivative financial instruments are 
classified in the statement of cash flows in a manner consistent with 
those of transactions being hedged.

  	MARKETABLE SECURITIES - Marketable securities are classified as 
available for sale, are highly liquid and are purchased and sold on a 
short-term basis as part of IBP's management of working capital.  Such 
securities consist of auction market preferred stock, which management 
does not intend to hold more than one year, and tax-exempt securities and 
commercial paper with maturities of less than one year.  Marketable 
securities are carried at cost, which approximates fair value.

  	INVENTORIES - Inventories are valued on the basis of the lower of 
first-in, first-out cost or market.  

  	PROPERTY, PLANT AND EQUIPMENT - Depreciation is provided for 
property, plant and equipment on the straight-line method over the 
estimated useful lives of the respective classes of assets as follows:

           Land improvements..................8 to 20 years
           Buildings and stockyards..........10 to 40 years
           Equipment..........................3 to 12 years

  	Leasehold improvements, included in the equipment class, are 
amortized over the life of the lease or the life of the asset, whichever 
is shorter.

  	GOODWILL - Goodwill is amortized on a straight-line basis over  
periods ranging from 15 years to 40 years.  Management reviews goodwill 
as well as other long-lived assets for impairment whenever events or 
changes in circumstances indicate that the carrying amount may not be 
recoverable.

  	FOREIGN CURRENCY TRANSLATION - The translation of foreign currency 
into U.S. dollars is performed for balance sheet accounts using the 
current exchange rate in effect at the balance sheet date and for revenue 
and expense accounts using the average exchange rate during the period.  
The gains or losses resulting from translation are included in 
stockholders' equity. Exchange adjustments resulting from foreign 
currency transactions, which were not material in any of the years 
presented, are generally recognized in net earnings.

  	ACCOUNTING CHANGES - In 1998, the company adopted Statement of 
Financial Accounting Standards ("SFAS") No. 130, "Reporting 
Comprehensive Income" (see "Consolidated Statements of Changes in 
Stockholders' Equity and Comprehensive Income" and below), SFAS No. 
131, "Disclosures About Segments of an Enterprise" (see Note M) and 
SFAS No. 132, "Employers' Disclosures about Pensions and Other 
Postretirement Benefits" (see Note J). These standards expand or modify 
disclosures and have no effect on the company's consolidated financial 
position, results of operations or cash flows.  Information for prior 
years has been restated to conform to the requirements of these 
standards.

  	In June 1998, SFAS No. 133, "Accounting for Derivative Instruments 
and Hedging Activities" was issued, and is effective no later than the 
first quarter of fiscal 2000.  Based upon the company's current level 
of derivatives activity, management expects that this standard will not 
materially affect the company's financial position or results of 
operations. 

   COMPREHENSIVE INCOME - Comprehensive income consists of net 
earnings and foreign currency translation adjustments.  Management 
considers its foreign investments to be permanent in nature and does 
not provide for taxes on currency translation adjustments arising from 
converting the investment in a foreign currency to U.S. dollars.  
There are no reclassification adjustments to be reported in the 
periods presented.

   RECLASSIFICATIONS - Certain reclassifications have been made to prior 
financial statements to conform to the current year presentation.


B.	INVENTORIES:

  	Inventories are comprised of the following:

                                  December 26,      December 27,
                                     1998              1997
                                  ------------      ------------       
        Product inventories:
           Raw materials           $ 22,552           $ 22,952
           Work in process           69,790             82,679
           Finished goods           148,542            165,970
                                    -------            -------
                                    240,884            271,601
        Livestock                    89,321             45,908
        Supplies                     75,213             72,244
                                    -------            ------- 
                                   $405,418           $389,753
                                    =======            =======

C.	CREDIT ARRANGEMENTS:

  	At December 26, 1998, IBP had in place two committed revolving 
credit facilities totaling $600 million in potential borrowings. These 
facilities include a $500 million multi-year credit facility (the "Multi-
Year Facility") and a $100 million revolving promissory note (the 
"Promissory Note"). From time to time, IBP also may use uncommitted lines 
of credit for some or all of its short-term borrowing needs.

  	The Multi-Year Facility is a revolving facility with a maturity date 
of December 20, 2000, which may be extended for one-year increments 
annually during the revolving period with consent of the banks involved. 
Facility fees can vary from .085 to .200 of 1% on the total amount of the 
facility.

  	The Promissory Note with Bank of America was extended on May 1, 1998 
and matures on April 30, 1999. 

  	There were total borrowings of $225 million outstanding under the 
revolving facilities at December 26, 1998, $50 million of which was 
classified as current liabilities.  IBP also had $91 million of short-
term borrowings outstanding at year-end 1998 under uncommitted credit 
lines.  The remaining $175 million under revolving facilities, which IBP 
does not intend to repay within one year, was classified as non-current 
in the consolidated balance sheet.  The interest rate at December 26, 
1998 on the non-current portion was 5.4%.

  	During fiscal 1998, the maximum amount of borrowings under all of 
IBP's credit arrangements, including any amounts considered non-current, 
was $529 million.  Average borrowings under IBP's credit arrangements and 
the weighted average interest rate during fiscal 1998 were $423 million 
and 5.8%. The comparable 1997 figures were average borrowings of $281 
million and an average interest rate of 5.9%.

  	IBP's credit facility agreements contain certain restrictive 
covenants which, among other things, (1) require the maintenance of a 
minimum debt service coverage ratio; and (2) provide for a maximum funded 
debt ratio.


D.	ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

  	Accounts payable and accrued expenses are comprised of the 
following:
                                   December 26,    December 27,
                                       1998            1997
                                   ------------    ------------
     
   Accounts payable, principally    
     trade creditors                 $220,972       $219,449
                                      -------        -------
   Checks in process of clearance      94,888        126,279
                                      -------        ------- 
   Accrued expenses:
     Employee compensation             74,728         73,724
     Employee benefits                 34,771         34,733
     Property and other taxes          24,809         25,886
     Marketing costs                   14,352         13,808
     Other                            100,997         75,762
                                      -------        -------  
                                      249,657        223,913
                                      -------        -------
                                     $565,517       $569,641
                                      =======        =======

E.	INCOME TAXES:

   Income tax expense consists of the following:
	
                              1998           1997            1996
                             ------         -------         -------             
        
        Current:
          Federal           $118,260       $ 72,000        $100,775
          State               13,380          3,825           8,275
          Foreign               (640)        (5,300)          4,250
                             -------         ------         -------     
                             131,000         70,525         113,300
                             -------        -------         -------
        Deferred:
          Federal             (5,630)         3,100           6,575
          State                  480            300             550
          Foreign               (150)        (2,225)            375
                             -------        -------         ------- 
                              (5,300)         1,175           7,500
                             -------        -------         -------
                            $125,700       $ 71,700        $120,800
                             =======        =======         =======

  	Total income tax expense varies from the amount which would be 
provided by applying the U.S. federal income tax rate to earnings before 
income taxes. The major reasons for this difference (expressed as a 
percentage of pre-tax earnings) are as follows:


                                1998           1997          1996
                                ----           ----          ----   

  Federal income tax rate       35.0%          35.0%         35.0%
  State income taxes, net                                        
   of federal benefit            2.9            1.7           1.7
  Goodwill amortization          1.8            2.5           0.8 
  Foreign Sales Corporation
   benefits                     (0.4)          (0.8)         (0.5)
  Other, net                    (1.3)          (0.4)           .8
                                ----           ----          ---- 
                                38.0%          38.0%         37.8%
                                ====           ====          ====        

  	The Internal Revenue Service (IRS) has proposed certain income tax 
adjustments which are being contested by the company involving the years 
1989 through 1991.  The IRS is currently examining the years 1992 through 
1996.  In management's opinion, adequate provisions for income taxes have 
been made for all years.

  	Deferred income tax liabilities and assets were comprised of the 
following:

                                       December 26,     December 27,
                                           1998             1997
                                       -----------      ------------
                        
Deferred tax assets:  
    Nondeductible accrued liabilities    $ 95,085          $ 90,281 
    State tax credit carryforwards          8,543             9,996 
    Bad debt and claims reserves            4,372             3,598 
    Federal and state operating
     loss carryforwards                    20,874            27,404
    Other                                   2,987             2,829 
                                          -------           -------
    Gross deferred tax assets             131,861           134,108 
    Valuation allowance                    (8,543)           (9,996)
                                          -------           -------        
    Net deferred tax assets               123,318           124,112
                                          -------           ------- 

Deferred tax liabilities:
    Fixed assets                          (75,107)          (82,746)
    Intangible assets                     (11,445)           (8,210)
    Other                                  (3,860)           (4,266)
                                          -------           ------- 
                                          (90,412)          (95,222)
                                          -------           ------- 
                                         $ 32,906          $ 28,890
                                          =======           =======

  	The net $1.5 million decrease in the valuation allowance for 
deferred tax assets was the result of net utilization of state tax credit 
carryforwards.  No benefit has been recognized for these state tax credit 
carryforwards, most of which expire in the years 2004 through 2008.

  	At December 26, 1998, after considering utilization restrictions, 
the company's acquired tax loss carryforwards approximated $65.9 million.  
The net operating loss carryforwards, which are subject to utilization 
limitations due to ownership changes, may be utilized to offset future 
taxable income as follows: $16.0 million in 1999 and 2000, $16.1 million 
in 2001 and 2002 and $1.7 million in 2003.  Loss carryforwards not 
utilized in the first year that they are available may be carried over 
and utilized in subsequent years, subject to their expiration provisions. 
These carryforwards expire as follows: $0.3 million in 2000, $4.2 million 
in 2001, $17.2 million in 2002, and $44.2 million during the years 2004 
through 2009.


F.	LONG-TERM OBLIGATIONS:

  	Long-term obligations are summarized as follows:
                                        December 26,    December 27,
                                            1998            1997
                                        ------------    ------------
                                            
         Revolving credit facilities      $175,000        $112,950
         7.45% Senior Notes due 2007       125,000         125,000
         10.75% Senior Subordinated
           Notes due 2006                     -            112,050
         6.125% Senior Notes due 2006      100,000         100,000
         7.125% Senior Notes due 2026      100,000         100,000
         6.0% Securities due 2011           50,000            -   
         Present value of minimum 
           capital lease obligations        27,526          19,093
         Other                               1,076           1,400
                                           -------         -------
                                           578,602         570,493
         Less amounts due within one 
           year                              3,080           2,212
                                           -------         -------
                                          $575,522        $568,281
                                           =======         =======

  	In June 1997, the company completed its public offering of $125 
million principal amount of 7.45% Senior Notes due 2007.  Net proceeds 
from the offering were ultimately used to reduce borrowings under IBP's 
revolving credit facilities.

  	On January 15, 1998, the company settled and closed its public 
offering of $50 million aggregate principal amount of 6.0% Remarketable 
or Redeemable Securities, due January 15, 2011 (the "6.0% Securities").  
The net proceeds from the 6.0% Securities were added to the company's 
working capital.  The 6.0% Securities were the first series of notes 
issued under the company's $300 million aggregate principal amount, 
Medium-Term Notes program which commenced on December 12, 1997.

  	During the first quarter 1998, the company completed its purchase of 
all of the $112 million outstanding 10.75% Senior Subordinated Notes of 
its wholly-owned subsidiary, Foodbrands America, Inc.  Net prepayment 
premiums, accelerated amortization of unamortized deferred financing 
costs, and transaction expenses totaled $24 million, before applicable 
income tax benefit of $9 million, and was accounted for as an 
extraordinary loss.

  	The purchase of these obligations by IBP was funded with available 
credit facilities and will likely be refinanced at a later date under the 
company's $300 million registered Medium-Term Notes program.  The portion 
of borrowings under IBP's revolving credit facilities considered long-
term increased to $175 million at December 26, 1998 from $113 million at 
December 27, 1997.

  	Substantially all of the leased assets under capital leases can be 
purchased by IBP at the end of the respective lease terms.  Leased 
assets, which are included with owned property in the consolidated 
balance sheets, at cost totaled $31 million; accumulated amortization on 
these assets totaled $9 million.

  	Aggregate maturities of long-term obligations for each of the five 
fiscal years subsequent to 1998 are (in millions) $3.1; $177.7; $3.8; 
$2.1 and $51.1.

	
G.	STOCK PLANS:

  	Officer Long-Term Stock Plans:
  	IBP has officer long-term stock plans which provide for awards to 
key officers of IBP which, subject to certain restrictions, will vest 
generally after five years resulting in the delivery of shares of common 
stock over the one-year period following such vesting.  At December 26, 
1998, there were approximately 720,000 shares available for future awards 
under the plans.  For approximately 125,000 shares (average grant price 
of $18.86) granted under the plans, the company is obligated to pay the 
mandatory federal withholding and Medicare taxes upon delivery of the 
shares.  The company recognized compensation expense for these plans 
totaling $2.3 million, $3.3 million and $3.0 million, respectively, in 
1998, 1997 and 1996.

   The status of shares under the officer long-term stock plans is 
summarized as follows:

                                     Number of      Weighted Average 
                                      Shares         Price per Share
                                     ---------     -----------------       

  Balance, December 30, 1995          1,274.8            $10.57
    Granted                              55.6             25.10
    Delivered                            (9.5)             8.28
    Forfeited                              -                -
                                      -------------------------
  Balance, December 28, 1996          1,320.9             11.07
    Granted                             260.1             21.14
    Delivered                        (1,020.0)             8.41
    Forfeited                           (10.2)            18.36
                                      ------------------------- 
  Balance, December 27, 1997            550.8             20.48
    Granted                              48.7             23.94
    Delivered                              -                -  
    Forfeited                            (9.3)            21.48
                                      -------------------------
  Balance, December 26, 1998            590.2            $20.54
                                      =======             =====

  	Stock Option Plans:
  	IBP has stock option plans under which incentive and non-qualified 
stock options may be granted to key employees and directors of IBP and 
its subsidiaries.  As of December 26, 1998, the plans provided for the 
delivery of up to 7.4 million shares of common stock upon exercise of 
options granted at no less than the market value of the shares on the 
effective date of grant. An additional 0.4 million options granted in 
1998 were non-qualified ("non-qualifying options") based upon differences 
in market price on the effective date and issuance date.  The 1998 
expense recorded for the non-qualifying options was not material.

  	All options may be granted for terms up to but not exceeding ten 
years and are generally fully vested after five years from the date 
granted.  At December 26, 1998 and December 27, 1997, there were 3.2 
million and 3.6 million options, respectively, reserved for future 
grants.

  	The company follows the disclosure-only provisions of Statement of 
Financial Accounting Standards No. 123, "Accounting for Stock-Based 
Compensation" ("SFAS No. 123").  Accordingly, no compensation cost has 
been  recognized for the stock option plans under that standard.  Had 
compensation cost for IBP's stock option plans been determined based on 
the fair value at the grant date for awards in 1998, 1997, and 1996 
consistent with the provisions of SFAS No. 123, IBP's net earnings and 
earnings per share would have been reduced to the pro forma amounts 
indicated below :

                                         1998         1997        1996
                                        -------      -------     ------- 
   Net earnings - as reported          $190,007     $117,014    $198,735
   Net earnings - pro forma             187,088      114,236     196,518
   Earnings per share - as reported        2.05         1.26        2.10
   Earnings per share - pro forma          2.02         1.23        2.08
   Diluted earnings per share -
     as reported                           2.03         1.25        2.07
   Diluted earnings per share -
     pro forma                             2.00         1.22        2.05

  	The weighted average fair values at date of grant for options 
granted at market value during 1998, 1997 and 1996 were $7.29, $7.91 and 
$9.89 per option respectively. The weighted-average fair value for the 
non-qualifying options granted in 1998 was $13.15 per option.  The fair 
value of each option was estimated on the date of grant using the Black-
Scholes option-pricing model with the following weighted-average 
assumptions for options granted in 1998, 1997 and 1996:

                           1998             1997             1996
                         -------          -------         -------  
Expected option life     6 years          6 years         6 years 
Expected annual 
 volatility                 26%             26%              30%   
Risk-free interest 
 rate                      4.7%            5.8%             6.5%   
Dividend yield             0.4%            0.4%             0.4%   



   The status of stock options under the plans is summarized as follows:

                        Number of  Weighted Average    Options
                         Shares    Price Per Share   Exercisable
                        ---------  ----------------  -----------
Balance at 
  December 30, 1995     4,583.6        $14.93         1,256.4
   Granted                675.4         24.25  
   Exercised             (464.4)        10.04  
   Canceled              (244.7)        19.88
-----------------------------------------------------------------   
Balance at 
  December 28, 1996     4,549.9         16.09         1,721.0
   Granted                658.2         21.63   
   Exercised             (738.5)         8.78  
   Canceled              (344.4)        21.25
-----------------------------------------------------------------
Balance at 
  December 27, 1997     4,125.2         17.85         1,846.3
   Granted at market
     value                208.7         21.37
   Granted at a price
     below market value   434.2         16.56
   Exercised             (320.1)        11.44    
   Canceled              (199.4)        21.64
-----------------------------------------------------------------
Balance at
  December 26, 1998     4,248.6        $18.20         2,230.9            

   The following table summarizes information about stock options 
outstanding at December 26, 1998:

                        Number    Weighted Average
     Range of        Outstanding      Remaining      Weighted Average      
Exercisable prices   At 12/26/98  Contractual Life    Exercise Price
------------------   -----------  ----------------   ---------------- 

 $ 6.75 to 15.99       1,211.9        4.0 Years          $10.53  
  16.00 to 25.99       2,933.1        7.7 Years           21.16  
  26.00 to 33.00         103.6        8.1 Years           28.10
---------------------------------------------------------------      
 $ 6.75 to 33.00       4,248.6        6.6 Years          $18.20    

                                Number 
          Range of           Exercisable     Weighted Average
     Exercisable prices      At 12/26/98      Exercise Price
     ------------------      -----------     ----------------

       $ 6.75 to 15.99         1,174.7           $10.27  
        16.00 to 25.99         1,020.3            21.69  
        26.00 to 33.00            35.9            28.34
        ----------------------------------------------- 
       $ 6.75 to 33.00         2,230.9           $15.78  

	  Share Delivery Restrictions:                 
  	Shares of common stock to be delivered for approximately 0.8 million 
options under the stock option plans must come from previously issued 
shares. All other shares of stock to be delivered pursuant to the stock 
option plans and the officer long-term stock plans may alternatively come 
from previously authorized but unissued common stock.


H.	SUPPLEMENTAL CASH FLOW INFORMATION:

  	Supplemental information on cash payments is presented as follows:

                                   1998         1997         1996
                                 --------     --------      -------
                                                         
    Interest, net of amounts     
      capitalized                 $47,775     $ 37,670     $  2,045
    Income taxes                   74,343       39,017      108,625


I.	FINANCIAL INSTRUMENTS:
	 
  	Interest and Currency Rate Derivatives:
	  The company's policy is to manage interest cost using a mix of fixed 
and variable rate debt.  To manage this mix in a cost-effective manner, 
the company may enter into interest rate swaps in which the company 
agrees to exchange, at specified intervals, the difference between fixed 
and variable interest amounts calculated by reference to an agreed-upon 
notional principal amount.  These interest rate swaps effectively convert 
a portion of the company's fixed-rate debt to variable-rate debt, or vice 
versa.  

  	The notional amounts of these swap agreements were $50 million at 
year-end 1998 and $75 million at year-end 1997.  The notional amounts of 
these and other derivative instruments do not represent assets or 
liabilities of the company but, rather, are the basis for the settlements 
under the contract terms.

  	The company's Canadian subsidiary enters into currency futures 
contracts to hedge its exposures on live cattle and purchase commitments 
in foreign currencies.  At December 26, 1998, the company had outstanding 
contracts to buy Canadian dollars totaling CDN$130 million at various 
dates through 1999. Comparable outstanding contracts at year-end 1997 
totaled CDN$34 million.

  	There were no material realized or unrealized gains or losses for 
any derivative financial instruments in any of the fiscal years 
presented.  The company monitors the risk of default by its financial 
instrument counterparties, all of which are major financial institutions, 
and does not anticipate nonperformance.

  	Fair Value of Financial Instruments:
	  The following methods and assumptions are used in estimating the 
fair value of each class of the company's financial instruments at 
December 26, 1998:

  	For cash equivalents, marketable securities, accounts receivable, 
notes payable and accounts payable, the carrying amount is a reasonable 
estimate of fair value because of the short-term nature of these 
instruments.

  	For securities included in other assets, fair value is based upon 
quoted market prices for these or similar securities.  The carrying 
amount approximates fair value for these securities.

  	For long-term debt, fair value was determined using valuation 
techniques that considered cash flows discounted at current market rates 
and management's best estimate for instruments without quoted market 
prices.  At year-end 1998, the fair value exceeded the carrying value by 
$6 million. At year-end 1997, the fair value exceeded the carrying value 
by $22 million.  The company's long-term debt is generally not callable 
until maturity, except for the 7.125% Senior Notes due 2026. 

  	For derivatives, the fair value was estimated using termination cash 
values.  The fair values of IBP's derivatives at year-ends 1998 and 1997 
were not material.


J.	PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS:

    IBP's subsidiary, Foodbrands America, Inc. ("Foodbrands"), has 
defined benefit pension plans at three of its facilities. Foodbrands 
also provides life insurance and medical benefits for substantially all 
retired hourly and salaried employees of one of its subsidiaries under 
various defined benefit plans.

                                     Pension Benefits     Other Benefits
                                     ----------------    ---------------
                                      1998      1997      1998      1997
                                     -----      ----      ----      ----
Change in benefit obligation:
Benefit obligation at beginning
 of year                            $68,933   $66,368  $ 69,410  $ 69,322
Service cost                            473       411       229       197
Interest cost                         4,787     4,956     4,799     5,018
Actuarial loss                        3,117     3,599       666       902
Benefits paid                        (6,389)   (6,401)   (6,253)   (6,029)
                                     ------    ------    ------    ------ 
                                    
Benefit obligation at end of year    70,921    68,933    68,851    69,410
                                     ------    ------    ------    ------ 

Change in plan assets:
Fair value of plan assets at
 beginning of year                   65,110    59,529         9       264
Actual return on plan assets          5,165     7,477      -            1
Employer contribution                 2,851     4,505     6,249     5,773
Benefits paid                        (6,389)   (6,401)   (6,253)   (6,029)
                                     ------    ------    ------    ------ 

Fair value of plan assets at
 end of year                         66,737    65,110         5         9
                                     ------    ------    ------     -----

Funded status                        (4,184)   (3,823)  (68,846)  (69,401)
Unrecognized net actuarial loss       3,812       317     1,587       904
                                     ------    ------   -------   -------
Net amount recognized               $  (372)  $(3,506) $(67,259) $(68,497)
                                     ======    ======   =======   =======

Amounts recognized in the statement
 of financial position consist of:

Prepaid benefit cost                $ 1,046   $   846  $   -     $   -
Accrued benefit liability            (1,418)   (4,352)  (67,259)  (68,497)
                                     ------    ------   -------   -------
Net amount recognized               $  (372)  $(3,506) $(67,259) $(68,497)
                                     ======    ======   =======   ======= 

Weighted-average assumptions as of 
 year end:
Discount rate                          6.75%     7.25%    6.75%    7.25%
Expected return on plan assets         8.50%     8.50%     n/a      n/a 

   For measurement purposes, a 9.9% annual rate of increase in the per 
capita claims cost of covered health care benefits was assumed for 1998.  
The rate was assumed to decrease gradually to 8.9% by 2000, 7.7% by 2005, 
and 6.5% by 2010 and remain at that level thereafter.

Components of net periodic benefit cost:
Service cost                        $   473  $   411   $   229    $   197 
Interest cost                         4,787    4,956     4,799      5,018
Expected return on plan assets       (5,501)  (4,993)       (1)        (2)
                                     ------   ------     -----      -----  

Net periodic benefit cost           $  (241) $   374   $ 5,027    $ 5,213
                                     ======   ======    ======     ======  

     Assumed health care cost trend rates have a significant effect on 
the amounts reported for the health care plan.  A one-percentage-point 
change in assumed health care cost trend rates would have the following 
effects:

                                         1-percentage-     1-percentage-
                                        Point Increase    Point Decrease
                                        --------------    --------------

Effect on total of service and
 interest cost components for 1998           $   82             $   (79)
Effect on year-end postretirement
 benefit obligation                          $1,099             $(1,066)


K.	EARNINGS PER SHARE:
                                        For the Year Ended December 26, 1998
                                     ---------------------------------------  
                                       Earnings      Shares       Per Share
                                     (Numerator)  (Denominator)     Amount
                                     -----------  -------------  -----------   
Basic EPS
  Earnings before extraordinary
    item                               $204,822       92,485        $2.21
                                                                     ====
Effect of Dilutive Securities
  Employee stock plans                     -             910
                                        -------       ------      
Diluted EPS                            $204,822       93,395        $2.19 
                                        =======       ======         ====
  
                                      For the Year Ended December 27, 1997
                                     ------------------------------------- 
                                      Earnings      Shares      Per Share
                                     (Numerator)  (Denominator)   Amount
                                     ----------  -------------  ----------
                                         
Basic EPS
  Net earnings                         $117,014       92,651        $1.26
Effect of Dilutive Securities
  Employee stock plans                     -           1,141    
                                        -------       ------         ----       
Diluted EPS                            $117,014       93,792        $1.25 
                                        =======       ======         ==== 

                                   For the Year Ended December 28, 1996
                                  --------------------------------------
                                    Earnings      Shares     Per Share
                                  (Numerator)  (Denominator)   Amount
                                  -----------  ------------- -----------
Basic EPS
  Earnings before extraordinary
    item                            $198,735       94,688        $2.10
                                                                  ====
Effect of Dilutive Securities
  Employee stock plans                  -           1,402
                                     -------       ------
Diluted EPS                         $198,735       96,090        $2.07
                                     =======       ======         ====

    The summary below lists stock options outstanding at the end of the 
fiscal years which were not included in the computations of diluted EPS 
because the options' exercise price was greater than the average market 
price of the common shares.  These options had varying expiration dates.

                                           1998         1997         1996
                                          ------       ------       ------  
Stock options excluded from 
    Diluted EPS computation                 120        1,406          978

Average option price per share           $27.28       $24.95       $25.70


L.	ACQUISITION:

  	On May 7, 1997, the company, through a subsidiary, completed a 
merger with Foodbrands America, Inc. ("Foodbrands") for approximately 
$287 million, excluding transaction costs, and assumed liabilities of 
approximately $528 million.  Foodbrands is a leading U.S. producer, 
marketer and distributor of frozen and refrigerated products to the 
"away from home" food preparation market.  The acquisition was 
accounted for by the purchase method of accounting.  The excess of the 
aggregate purchase price over fair value of identifiable assets and 
liabilities acquired of approximately $463 million was recognized as 
goodwill and is being amortized over 40 years.  Foodbrands' historical 
goodwill of approximately $182 million was eliminated.

  	The operating results of Foodbrands are included in IBP's 
consolidated results of operations from the date of acquisition.  The 
following pro forma financial information assumes the acquisition 
occurred at the beginning of 1996.  These results have been prepared 
for comparative purposes only and do not purport to be indicative of 
what would have occurred had the acquisition been made at the 
beginning of 1996, or of the results which may occur in the future (in 
thousands except per share data).

                                                52 Weeks Ended
                                           ---------------------------
                                             Dec. 27,        Dec. 28,  
                                               1997            1996
                                           -----------     ----------- 
       Net sales                          $13,508,370     $13,283,587 
       Earnings from operations               240,080         364,379 
       Earnings before
         extraordinary item                   116,035         202,756 
       Net earnings                           116,035         197,705 
       Earning per share:
        Earnings before
          extraordinary item                    $1.25           $2.14 
        Net earnings                             1.25            2.09 
       Earnings per share - 
        assuming dilution:                       1.24            2.11 
        Earnings before 
          extraordinary item                     1.24            2.06 
        Net earnings

  	The company made other acquisitions in 1997 and 1998 for which pro 
forma results were not included above because the impact was not 
material.


M. BUSINESS SEGMENTS:

  	The company is managed and operated as two divisions, Fresh Meats 
and Enterprises, and, accordingly, has two business segments.  IBP's 
Fresh Meats operation relates principally to the meat processing industry 
and primarily involves cattle and hog slaughter, beef and pork 
fabrication and related allied product processing activities.  This 
segment markets its products to food retailers, distributors, 
wholesalers, restaurant and hotel chains, other food processors and 
leather makers, as well as manufacturers of pharmaceuticals and animal 
feeds.  The Enterprises segment consists of IBP subsidiaries Foodbrands 
and The Bruss Company, as well as three former IBP cooked meats plants 
transferred to Foodbrands in 1997.  The Enterprises group produces, 
markets and distributes a variety of frozen and refrigerated products to 
the "away from home" food preparation market, including pizza toppings 
and crusts, value-added pork-based products, ethnic specialty foods, 
appetizers, soups, sauces and side dishes as well as deli meats and 
processed beef, pork and poultry products.  Enterprises also produces 
portion-controlled premium beef and pork products for sale to restaurants 
and foodservice customers in domestic and international markets.  The 
company operates principally in the United States.

  	Intersegment sales have been recorded at amounts approximating 
market.  Earnings from operations are comprised of net sales less all 
identifiable operating expenses, allocated corporate selling, general and 
administrative expenses, and goodwill amortization.  Net interest expense 
and income taxes have been excluded from segment operations.  


NET SALES                              1998          1997          1996
                                    ----------    -----------    ----------

Sales to unaffiliated customers:                                               
  Fresh Meats                     $11,696,190    $12,421,902    $12,412,071
  Enterprises                       1,152,445        836,882        126,682
                                   ----------     ----------     ----------
                                  $12,848,635    $13,258,784    $12,538,753
                                   ==========     ==========     ==========

Intersegment sales:
  Fresh Meats                     $   185,459    $   148,224    $    48,084
  Intersegment elimination           (185,459)      (148,224)       (48,084)
                                   ----------     ----------     ----------
                                  $      -       $      -       $      -
                                   ==========     ==========     ========== 

Net sales:
  Fresh Meats                     $11,881,649    $12,570,126    $12,460,155
  Enterprises                       1,152,445        836,882        126,682
  Intersegment elimination           (185,459)      (148,224)       (48,084)
                                   ----------     ----------     ----------
                                  $12,848,635    $13,258,784    $12,538,753
                                   ==========     ==========     ==========
  
EARNINGS FROM OPERATIONS
  Fresh Meats                        $291,211       $195,493       $324,934
  Enterprises                          82,524         31,223         (2,026)
                                    ---------     ----------      ---------
  Total earnings from operations      373,735        226,716        322,908

  Net interest expense                (43,213)       (38,002)        (3,373)
                                    ---------     ----------      ---------  
  Pre-tax earnings                   $330,522       $188,714       $319,535
                                    =========       ========      =========     

TOTAL ASSETS     
                                               
  Fresh Meats                      $1,989,674     $1,923,517     $2,122,176
  Enterprises                       1,018,422        915,424         52,319
                                    ---------      ---------      ---------
                                   $3,008,096     $2,838,941     $2,174,495
                                    =========      =========      =========

ADDITIONS TO PROPERTY, PLANT
  AND EQUIPMENT,INCLUDING ACQUISITIONS

  Fresh Meats                        $123,179       $107,503       $148,082
  Enterprises                         122,513        351,313         22,582
                                      -------        -------        -------
                                     $245,692       $458,816       $170,664
                                      =======        =======        =======

DEPRECIATION AND AMORTIZATION
  Of fixed assets:
    Fresh Meats                      $ 74,034       $ 74,282       $ 71,711
    Enterprises                        26,787         18,010          2,199
                                      -------        -------        -------  
                                     $100,821       $ 92,292       $ 73,910
                                      =======        =======        =======
  Of intangible assets:
    Fresh Meats                      $ 12,295       $  8,944       $  8,780
    Enterprises                        13,110          8,694           -
                                      -------        -------        ------- 
                                     $ 25,405       $ 17,638       $  8,780
                                      =======        =======        =======

NET SALES BY GEOGRAPHIC LOCATION OF CUSTOMERS

                               1998          1997         1996
                            ----------    ----------    ----------

United States              $10,952,780   $11,167,708   $10,416,883
Japan	                         784,624       909,855     1,058,630
Korea	                         134,271       224,272       190,164
Canada                         421,701       508,568       505,012
Mexico                         173,074       125,533        75,492
Other foreign countries        382,185       322,848       292,572
                            ----------    ----------    ----------
                           $12,848,635    13,258,784   $12,538,753
                            ==========    ==========    ==========
     
N.  	 COMMITMENTS:

  	The company leases various facilities and equipment under 
noncancelable operating lease arrangements which expire at various dates 
through the year 2012.  Future minimum payments under noncancelable 
operating leases with lease terms in excess of one year at December 26, 
1998 totaled approximately $63 million.  Aggregate maturities for each of 
the five fiscal years subsequent to 1998 are (in millions) $15.2; $14.5; 
$8.0; $5.1; and $3.5.  The company's rental expense for all operating 
leases was (in millions) $21.9; $15.9; and $11.0 for fiscal years 1998, 
1997 and 1996.

  	The company had livestock and other purchase commitments, letters of 
credit, and other commitments and guarantees at December 26, 1998 
aggregating approximately $260 million.  Livestock purchase commitments  
were at a market or market-derived price at the time of delivery or were 
fully hedged if the price was determined at an earlier date.  

  	In addition to the livestock purchase commitments above, the company 
is committed to purchase approximately 12 million market hogs between 
1999 and 2009 at market-derived prices under Cash Flow Assistance ("CFA") 
contracts with producers.  Commitments for the next five years average 
approximately 1.8 million hogs annually, which represents less than 10% 
of IBP's current annual production capacity.  


O.	 CONTINGENCIES:

   	IBP is involved in numerous disputes incident to the ordinary course 
of its business.  In the opinion of management, any liability for which 
provision has not been made relative to the various lawsuits, claims and 
administrative proceedings pending against IBP, including that described 
below, will not have a material adverse effect on its future consolidated 
results of operations, financial position or liquidity.

  	In July 1996, a lawsuit was filed against IBP by certain cattle 
producers in the U.S. District Court, Middle District of Alabama, seeking 
certification of a class of all cattle producers.  The complaint alleges, 
inter alia, that IBP has used its market power and alleged "captive 
supply" agreements to reduce the prices paid to producers for cattle.  
Plaintiffs initially disclosed that, in addition to declaratory relief 
and punitive damages, they sought disgorgement of all profits earned in 
1994, 1995 and 1996 in excess of what they deem a "fair" return.  On 
September 15, 1998, the District Court rendered a decision denying class 
certification.  Plaintiffs have filed a motion requesting reconsideration 
of this decision, attempting to limit the class in a manner necessary to 
avoid conflicts between class members, and  attempting to present a 
damage analysis which the District Court will accept.  Based upon IBP's 
review of this information, management still believes that class 
certification is unlikely.  As previously stated, IBP believes it has 
acted properly and lawfully in its dealings with cattle producers.
	

P.	QUARTERLY FINANCIAL DATA (UNAUDITED):

  	Quarterly results are summarized as follows:

                           First     Second      Third     Fourth    
      1998                Quarter    Quarter    Quarter    Quarter      Annual
      ----                -------    -------    -------    -------      ------ 

      Net sales         $3,224,944 $3,334,340 $3,210,689 $3,078,662 $12,848,635
      Gross profit         103,829    126,141    193,251    238,987     662,208
      Earnings before 
       extraordinary item   13,599     33,853     65,581     91,789     204,822
      Net earnings (loss)   (1,216)    33,853     65,581     91,789     190,007
      Earnings per share:
      Earnings before
        extraordinary item     .15        .37        .71        .99        2.21
      Net earnings (loss)     (.01)       .37        .71        .99        2.05
      Earnings per share -
       assuming dilution:
      Earnings before
         extraordinary item    .15        .36        .70        .98        2.19
      Net earnings (loss)     (.01)       .36        .70        .98        2.03
      Dividends per share     .025       .025       .025       .025         .10
      Market price:
        High                24 1/2     23 1/8     21 1/8    29 7/16             
        Low               19 15/16     18 3/8    16 9/16         20             


    1997
   -----

   Net sales            $3,134,591 $3,448,337 $3,416,706 $3,259,150 $13,258,784
   Gross profit             82,856    119,959    125,441    114,636     442,892
   Net earnings             32,310     33,864     29,121     21,719     117,014
   Earnings per share          .34        .37        .32        .23        1.26
   Earnings per share - 
     assuming dilution         .34        .36        .31        .23        1.25
   Dividends per share        .025       .025       .025       .025         .10
   Market price:
     High                       26     25 1/2     24 1/4     25 1/2  
     Low                    22 3/4     22 3/8     22 1/8     20 3/8




                      REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of IBP, inc.

  	 In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, changes in stockholders' equity and 
comprehensive income, and of cash flows present fairly, in all material 
respects, the consolidated financial position of IBP, inc. and subsidiaries at 
December 26, 1998 and December 27, 1997, and the consolidated results of their 
operations and their cash flows for each of the three years in the period ended 
December 26, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the company's management; 
our responsibility is to express an opinion on these financial statements based 
on our audits.  We conducted our audits of these statements in accordance with 
generally accepted auditing standards which require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement.  An audit includes examining, on a test 
basis, evidence supporting the amounts and disclosures in the financial 
statements, assessing the accounting principles used and significant estimates 
made by management, and evaluating the overall financial statement 
presentation.  We believe that our audits provide a reasonable basis for the 
opinion expressed above.


/s/  PricewaterhouseCoopers LLP
--------------------------------
PricewaterhouseCoopers LLP
Omaha, Nebraska
January 22, 1999


REPORT ON FINANCIAL STATEMENT INTEGRITY BY MANAGEMENT

To our Stockholders:

  	IBP's consolidated financial statements have been prepared by management and 
we are responsible for their integrity and objectivity.  The accompanying 
consolidated financial statements have been prepared in accordance with 
generally accepted accounting principles ("GAAP").  We believe these statements 
present fairly the company's financial position and results of operations.

  	Our independent auditors, PricewaterhouseCoopers LLP, have audited these 
consolidated financial statements.  Their audit was conducted using generally 
accepted auditing standards, which included consideration of our internal 
controls in order to form an independent opinion on the financial statements.We 
have made available to PricewaterhouseCoopers LLP, all the company's financial 
records, as well as the minutes of meetings of stockholders and directors.

  	IBP relies on a system of internal accounting controls to provide assurance 
that assets are safeguarded and transactions are properly authorized and 
recorded. We continually monitor these controls, modifying and improving themas 
business operations change.  IBP maintains a strong internal auditing departmnt 
that independently reviews and evaluates these controls as well.

  	The Audit Committee of the Board of Directors provides oversight to ensure 
the integrity and objectivity of the company's financial reporting process and 
the independence of our internal and external auditors.  Both internal audit 
and PricewaterhouseCoopers LLP, have complete access to the Board's Audit 
Committee with or without the presence of management personnel.

  	Our management team is responsible for proactively fostering a strong 
climate of ethical conduct so that the company's affairs are carried out 
according to the highest standards of personal and corporate behavior.  This 
responsibility is specifically demonstrated in IBP's conflict of interest 
policy which requires annual written acknowledgment by each and every officer 
and those management personnel so designated.

  	We are pleased to present this annual report and the accompanying 
consolidated financial statements for your review and consideration.

Most sincerely,

/s/ Robert L. Peterson                            /s/ Larry Shipley
____________________________________              ______________________________
Robert L. Peterson                                Larry Shipley
Chairman and Chief Executive Officer              President, IBP Enterprises and
IBP, inc.                                           Chief Financial Officer
                                                  IBP, inc.




	            	MANAGEMENT'S DISCUSSION AND ANALYSIS


  	The matters discussed herein contain forward-looking statements.  
Specifically, these forward-looking statements include risks and 
uncertainties.  Thus, actual results may differ materially from those 
expressed or implied in those statements.  Those risks and uncertainties 
include, without limitation, risks of changing market conditions with regard 
to livestock supplies and demand for the company's products, domestic and 
international legal and regulatory risks, the costs of environmental 
compliance, the impact of governmental regulations, operating efficiencies, 
as well as competitive and other risks over which IBP has little or no 
control.  Moreover, past financial performance should not be considered a 
reliable indicator of future performance.  The company makes no commitment to 
update any forward-looking statement, or to disclose any facts, events or 
circumstances after the date hereof that may affect the accuracy of any 
forward-looking statement.


RESULTS OF OPERATIONS

  	This section presents analysis of IBP's consolidated operating 
results displayed in the Consolidated Statements of Earnings and should be 
read together with the business segments information in Note M to the 
consolidated financial statements.

  	STRATEGIC GROWTH

  	Acquisitions of Foodbrands America, Inc. ("Foodbrands") and the Bruss 
Company ("Bruss") were completed in the second quarter of 1997. The 
Foodbrands purchase, effective as of May 7, 1997, extended the company's 
product base into value-added, branded food products.  Foodbrands is a 
leading U.S. producer, marketer, and distributor of frozen and refrigerated 
products to the "away from home" food preparation market, which is a fast-
growing segment of the food industry.  An industry leader in pizza topping 
sales, Foodbrands is also a major provider of value-added, pork-based 
products to the food service industry.  Foodbrands produces over 1,600 
branded and custom products, including pizza toppings and crusts, ethnic 
specialty foods, breaded appetizers, soups, sauces, and side dishes as well 
as deli meats and processed beef, pork, and poultry products.  The Bruss 
purchase, effective as of May 30, 1997, brought to IBP a processor of 
individual cuts of premium quality beef and pork for sale to restaurants 
and foodservice providers both domestically and internationally.  

  	IBP purchased a bacon topping manufacturer, Winchester Food 
Processing, Inc., ("Winchester") in Hutchinson, Kansas, in the third 
quarter of 1997.  Winchester produces bacon toppings and bacon bits for the 
foodservice industry and has expanded its operations in 1998 to include 
additional cooked meat products.  IBP also purchased one of the nation's 
leading producers of high quality appetizers in the fourth quarter of 1998.  
The company purchased the appetizer division of Diversified Foods Group 
("DFG") which has plants in Chicago, Illinois, and Newark, New Jersey.  DFG 
produces and markets a variety of hors d'oeuvres, appetizers, desserts and 
prepared meals for foodservice companies, club stores and retail grocery 
chains.  Winchester and DFG will both be part of IBP's Foodbrands 
subsidiary.

	
COMPARISON OF 1998 TO 1997	

  	Operating earnings in 1998 measured 2.9% of net sales versus 1.7% in 
1997.  The Fresh Meats 1998 operating margin measured 2.5% of net sales 
compared to 1.6% in 1997.  The higher 1998 figure reflected much-improved 
pork margins offset by lower beef margins caused by competing domestic meat 
supplies and weaker export demand resulting from economic problems in the 
Far East.  Meanwhile, Enterprises' operations performed above expectations 
as product demand increased and raw material prices decreased.

Net Sales
                            1998          1997          % Change		
                        -----------   -----------       --------
   Fresh Meats          $11,696,190   $12,421,902      		-5.8%
   Enterprises            1,152,445       836,882        37.7%
                         ----------    ----------        ----
   Total                $12,848,635   $13,258,784        -3.1%
                         ==========    ==========        ====
Earnings from Operations
   Fresh Meats          $   291,211   $   195,493       	49.0%
   Enterprises               82,524        31,223       164.3%
                         ----------    ----------       -----
   Total                $   373,735   $   226,716        64.8%
	                        ==========    ==========       =====

  	SALES

  	The 6% decrease in Fresh Meats' net sales was due to lower average 
prices of beef and pork products sold.  Average 1998 pork prices in 
particular fell 26% from 1997.  These lower average prices were partially 
offset by increases in pounds of beef and pork products sold.  Enterprises'
net sales in 1997 included 35 weeks for Foodbrands and 31 weeks for Bruss.  
Meanwhile, Enterprises' comparable period sales also decreased in 1998 from 
1997 due to lower selling prices resulting from lower raw material costs 
passed through to customers, which offset an increase in pounds sold.
	
  	Net export sales in 1998 decreased 6% from 1997.  Export tonnage in 
1998 increased 21% over 1997 but was offset by overall lower prices and a 
sales mix with a higher percentage of lower valued products.  Exports 
accounted for approximately 12.3% of consolidated net sales in 1998 versus 
12.7% in 1997.

  	The Asian region accounted for 67% of total net export sales in 1998 
compared to 73% in 1997.  The decline was due to much-publicized economic 
difficulties.  The Far East shortfall was partially offset by increased 
exports to Mexico and South America destinations.  

  	The USDA has predicted that 1999 U.S. red meat exports will increase 
slightly over 1998.  They foresee relatively weak world economic growth but 
some improvement in sales to the Pacific Rim, especially Japan.  The 
company's 1998 net export sales to Japan, IBP's most significant export 
market, were 14% lower than in 1997, although sales volume in 1998 
increased 7% over 1997.
 
	  COST OF PRODUCTS SOLD
	
  	The cost of products sold in 1998 decreased 5% from the same 1997 
period.  Fresh Meats experienced a 7% decrease in 1998 costs versus the 
prior year.  This decrease was primarily due to reduced average prices paid 
for live hogs and cattle, which overrode the effect of increases in pounds 
of pork and beef products sold.  Fresh Meats' plant costs increased due 
primarily to higher labor costs and increased pork volume.  Enterprises 
also experienced lower comparable cost of products sold due primarily to 
the lower pork raw material prices.

  	Industry experts predict that fed cattle supplies will remain strong 
into the first half of 1999 before tightening somewhat.  Meanwhile, 
favorable hog supplies are expected throughout 1999 despite the recent 
price decline due to an increase in hog production facilities in recent 
years and relatively low feed grain prices.  This factor bodes well for 
Enterprises as well as Fresh Meats due to the significance of pork as a raw 
material in Enterprises' product base.

  	SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

	  1998 expense was 33% higher than in 1997.  Excluding the effect of 
new subsidiaries, 1998 expense was 10% higher than in 1997.  Generally, 
higher incentive compensation and amortization of intangibles was partially 
offset by accrual of refunds of U.S. harbor maintenance taxes paid in prior 
years, based upon a U.S. Supreme Court decision which ruled their 
collection unconstitutional, as well as cessation of current year harbor 
tax expense.
     
  	Enterprises' selling expense is much higher as a percentage of net 
sales compared to Fresh Meats due to the value-added nature of their 
respective product lines which require increased levels of customer 
contact, brand name development and promotional costs.  The company expects 
that selling expense will continue to be significantly higher than in 
periods prior to the Foodbrands and Bruss acquisitions.

   INTEREST EXPENSE

  	The 14% higher net interest expense in 1998 versus 1997 was primarily 
attributable to 29% higher average borrowings brought about by the 
purchases of Foodbrands and Bruss in the second quarter 1997.  IBP's 
effective interest rate in 1998 was lower by 53 basis points from the 
average in 1997, which somewhat offset the higher average borrowings.  The 
lower effective interest rate was attributable in part to lower short-term 
market rates in 1998, the retirement of Foodbrands' 10.75% Senior 
Subordinated Notes in the first quarter 1998, and a favorable market 
position with IBP's interest rate swap contract.

   
COMPARISON OF 1997 TO 1996

	Earnings from operations, measured as a percentage of net sales, 
decreased to 1.7% in 1997 from 2.6% in 1996.  Excluding results of new 
acquisitions Foodbrands and Bruss, operating earnings fell to 1.5% in 1997.  
Fresh Meats margins were squeezed by increasing supplies of competing meats 
and new plant start up losses at the company's beef processing facility in 
Canada and pork complex in Logansport, Indiana.  In addition, export demand 
in important Asian markets was slowed in the latter part of 1997 by food 
safety scares and a stronger U.S. dollar versus Asian currencies.
	
Net Sales
                            1997          1996         % Change		
                        -----------   -----------      --------
   Fresh Meats          $12,421,902   $12,412,071       	 0.1%
   Enterprises              836,882       126,682       560.6%
                         ----------    ----------       -----
   Total                $13,258,784   $12,538,753         5.7%
                         ==========    ==========       =====

Earnings from Operations
   Fresh Meats          $   195,493   $   324,934       -39.8%
   Enterprises               31,223        (2,026)        n/a
                         ----------    ----------       -----
   Total                $   226,716   $   322,908       -29.8%
                         ==========    ==========       =====

  	SALES	

  	Net sales in 1997 rose 6% compared to 1996, with Enterprises 
accounting for most of the increase.  In IBP's comparative Fresh Meats 
operations, 1997 net sales were up slightly from 1996 due primarily to 
increased pounds of beef products sold.  
	
  	Net export sales in 1997 were also slightly higher in comparison to 
1996.  Except for Japan, the company achieved positive year-over-year 
comparisons in all significant export markets.  Exports to Japan improved 
throughout most of 1997 from the second half of 1996.  A food safety scare 
had sharply curtailed U.S. red meat sales into Japan in 1996.  The Asian 
financial crisis began to adversely impact exports late in 1997 as the 
strengthening U.S. dollar made American products more expensive for 
Japanese customers.  Total net exports accounted for 12.7% of consolidated 
net sales in 1997 versus 13.4% in 1996.

  	COST OF PRODUCTS SOLD

  	The 6% increase in cost of products sold from 1996 to 1997 was due 
largely to the impact of Enterprises.  Excluding the impact of these 
entities, IBP's Fresh Meats operations in 1997 compared to 1996 increased 
modestly due primarily to the new plant start ups in Alberta, Canada, and 
Logansport, Indiana.  A higher average price paid for live cattle also 
contributed to higher cost of products sold.  Plant costs in 1997 for 
comparable operations increased over 1996 primarily as a result of higher 
labor costs.  Additionally, 1996 cost of products sold was reduced $13 
million (after bonus impact) by reduction of a workers' compensation 
lawsuit reserve.
	
  	SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

  	Selling, general and administrative expense in 1997 was 79% higher 
than in 1996 due primarily to expenses incurred by Enterprises.  
Enterprises' selling expense is much higher as a percentage of net sales 
compared to Fresh Meats due to the incrementally higher value-added nature 
of its product lines.

  	Fresh Meats 1997 expenses were slightly higher than in the prior year 
due in part to higher personnel-related costs, outside contract services 
and international selling expense.  These higher costs were partially 
offset by reduced incentive compensation resulting from lower operating 
earnings.   

  	INTEREST EXPENSE

  	Net interest expense rose significantly in 1997 versus 1996 due 
mainly to the Foodbrands and Bruss acquisitions.  Incremental borrowings 
were necessary to acquire these companies and Foodbrands had existing debt 
of $341 million at the purchase date.  Total consolidated outstanding 
borrowings averaged $654 million in 1997 compared to $265 million in 1996.  
The company's effective average interest rate increased also, due primarily 
to the addition of Foodbrands' $112 million of 10.75% Senior Subordinated 
Notes.


LIQUIDITY AND CAPITAL RESOURCES

  	The meat processing industry is characterized by significant working 
capital requirements.  This is due largely to statutory provisions that 
generally provide for immediate payment for livestock, while it takes IBP 
on average about eight days to turn its product inventories and sixteen 
days to convert its trade receivables to cash.  These factors, combined 
with fluctuations in production levels, selling prices and prices paid for 
livestock, can impact cash requirements substantially on a day-to-day 
basis.  To provide cash for its working capital requirements, the company's 
credit facilities (more fully described in Note C to the consolidated 
financial statements) provide IBP with same-day access to an aggregate of 
$600 million in potential committed borrowings.  The unused portion of the 
committed credit lines was $375 million at December 26, 1998.


  	Although IBP has significant working capital requirements, its 
accounts receivable and inventories are highly liquid, characterized by 
rapid turnover.  The following are key indicators relating to IBP's working 
capital, asset-based liquidity, and leverage ratios:

                              	  December 26,    December 27,
                                          1998            1997     
                                       -----------     -----------
     Working capital (in millions)         $231             $207
     Current ratio                        1.3:1            1.2:1
     Quick ratio                          0.7:1            0.7:1
     Number of days' sales in      
       accounts receivable                 15.8             15.3 
     Inventory turnover                    30.0	            35.2
     Earnings to fixed charges              6.1              4.3
	
	  Positive 1998 operating cash flows contributed to improvement in the 
company's working capital and associated ratios.  However, differences in 
the nature of the Enterprises businesses (e.g., more numerous product 
lines, distribution channels, customers and credit terms) caused slower 
consolidated receivables and inventory turnover rates.  Meanwhile, 
receivables and inventory turnover rates for comparable Fresh Meats 
operations in 1998 were similar to those in 1997.
	
	  Total consolidated outstanding borrowings averaged $843 million in 
1998 compared to $654 million in 1997.  Borrowings outstanding at December 
26, 1998 under committed facilities totaled $225 million, and available 
unused credit capacity under committed facilities was $375 million.  
	
  	The purchase of the Foodbrands 10.75% Notes in the first quarter 1998 
by IBP, inc. was funded with available credit facilities and will likely be 
refinanced at a later date under the company's $300 million Medium-Term 
Notes program registered with the Securities and Exchange Commission.  The 
portion of borrowings under IBP's revolving credit facilities considered 
long-term increased to $175 million at December 26, 1998 from $113 million 
at year-end 1997.

  	In January 1998, the company settled and closed its public offering 
of $50 million aggregate principal amount of 6.0% Remarketable or 
Redeemable Securities, due January 15, 2011 (the "6.0% Securities").  The 
net proceeds from the 6.0% Securities were added to the company's working 
capital.  The 6.0% Securities were a series of notes issued under the 
company's Medium-Term Notes program.    	

  	The company invested $38 million in 1998 and $4 million during the 
fourth quarter 1997 in life insurance contracts for key employees.  Among 
other advantages, expected changes in the cash value of these contracts are 
intended to effectively act as a hedge against changes in the company's 
deferred compensation liabilities.

  	Capital expenditures in 1998 totaled $246 million compared to $134 
million in 1997.  Current year spending included purchases of the appetizer 
division of Diversified Food Group, with plants in Chicago, Illinois, and 
Newark, New Jersey, and a closed beef manufacturing facility in Norfolk, 
Nebraska.  The appetizer business will operate as a separate division 
within Enterprises while the beef manufacturing facility is part of Fresh 
Meats.  Additional 1998 spending went toward pork and foodservice plant 
expansions, construction of the company's new world headquarters, and 
ongoing replacements and modifications to existing facilities.  The company 
used positive operating cash flows and available debt facilities to fund 
its 1998 capital expenditures.
  
  	Management's estimate of 1999 capital spending is in the range of 
$175 million, the majority of which has been designated for revenue 
enhancement and capacity expansion.  The company intends to fund these 
expenditures with operating cash flows and available debt facilities.	


MARKET RISK

  	Interest Rates - The company manages interest cost using a mix of 
fixed and variable rate debt.  To manage this mix in a cost-effective 
manner, the company may enter into interest rate swaps in which the company 
agrees to exchange, at specified intervals, the difference between fixed 
and variable interest amounts calculated by reference to an agreed-upon 
notional principal amount.  These interest rate swaps effectively convert a 
portion of the company's fixed-rate debt to variable-rate debt or vice 
versa.  A sensitivity analysis indicates that with respect to interest rate 
derivative instruments in place at December 26, 1998, a 100-basis point 
increase in market interest rates would not have a material impact on the 
company's financial position, results of operations or cash flows.   

 	 Foreign Operations - Transactions denominated in a currency other 
than the entity's functional currency are generally hedged using currency 
forward contracts to reduce this market risk.  These transactions primarily 
involve the company's Canadian subsidiary, which enters into currency 
futures contracts to hedge its exposures on live cattle and purchase 
commitments in foreign currencies.  A sensitivity analysis indicates that a 
10% change in currency exchange rates would not have a material impact on 
the company's financial position, results of operations or cash flows.

  	Commodities - The company uses commodity futures contracts to hedge 
its forward livestock purchases which, in 1998, accounted for approximately 
2% of its livestock purchases.  The contract lives ranged from one to 
twelve months.  Any change in the value of the futures contracts is 
generally balanced by an offsetting change in the cash market price of the 
delivered livestock.  Additionally, a sensitivity analysis indicates that a 
10% change in livestock market prices would not have a material impact on 
the	company's financial position, results of operations or cash flows.


YEAR 2000	

  	The "Year 2000" problem relates to computer systems that have time 
and date-sensitive programs that were designed to read years beginning with 
"19," but may not properly recognize the year 2000.  If a computer system 
or other equipment with embedded chips or processors (collectively, 
"Business Systems") used by the company or a third party dealing with the 
company fails because of the inability of the system or application to 
properly read the year "2000," the results could conceivably have a 
material adverse effect on the company.  This Year 2000 issue can arise at 
any point in the company's supply, manufacturing, processing, distribution, 
and financial chains.

  	The company has an internal team responsible for assessing the impact 
of Year 2000 and leading and monitoring the company's state of readiness 
with respect to this issue.  The assessment and planning phase is 95% 
complete, the implementation phase is approximately 90% complete, and the 
testing phase is approximately 60% complete.  All phases are expected to be 
completed during 1999.

  	A significant portion of the company's Business Systems is internally 
developed and has been or is in the process of being remediated.  The 
Business Systems considered most critical to continuing operations are 
being given the highest priority.  None of the company's other information 
technology projects have been delayed due to the implementation of the Year 
2000 readiness program.

  	As part of the Year 2000 readiness program, significant service 
providers, vendors, suppliers, customers, and governmental entities ("Key 
Business Partners") that are considered critical to business operations 
around January 1, 2000, have been identified and steps are being undertaken 
in an attempt to reasonably ascertain their stage of Year 2000 readiness as 
it relates directly or indirectly to the company.  

  	The possible consequences of the company or its Key Business Partners 
not being fully Year 2000 compliant by January 1, 2000 include, among other 
things, temporary plant closings, delays in the delivery of products and/or 
receipt of supplies, invoice and collection errors and inventory and supply 
obsolescence.  However, the company believes that its Year 2000 readiness 
program, including the contingency planning discussed below, should 
significantly reduce the adverse effect any such disruptions may have.

  	The company currently has no formal contingency plan in place.  
However, the progress of the Year 2000 readiness program is being closely 
monitored and additional measures will be taken as risks arise.  These 
measures may include stockpiling critical supplies and packaging materials, 
securing alternate sources of supplies or services, and other appropriate 
measures.
	
  	It is currently estimated that the aggregate cost of the company's 
Year 2000 efforts will be approximately $14 million, of which $7 million 
has been spent.  The budgeted $14 million includes approximately $8 
million, of which $3 million has been spent, for computer hardware, 
substantially all of which will be capitalized.  The remaining $6 million 
is primarily for computer software modifications, all of which will be 
expensed as incurred and funded with operating cash flows.  Approximately 
$4 million has been expensed to date.

  	The company's Year 2000 readiness program is an ongoing process and 
the estimates of costs and completion dates for various components of the 
Year 2000 readiness program described above are subject to change.



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